I am by no means a G1 god or guru. There are better people to ask and I
do hope they'll chime in. I am however linked to that nickname that you
dropped and so I feel compelled to answer. ( And no, I'm not nor have I
ever been, a woman. )
The serial interface you're discussing does indeed exist on the HTC
Dream (G1). I hear it's possible to build a cable that is a mini-usb on
one end and a normal sized usb on the other. Between the two is a usb to
serial device. It's just a nice way to have a set of pin outs and power;
it's otherwise not a special cable.
If you have or build such a cable, you'll then be able to access a few
low level debuggers or boot prompts on the serial port. If you have the
right setup, you should be able to connect the cable, attach to the usb
serial device and set minicom to operate at 115200 8N1 (and with no
software/hardware flow control).
A photo of the mythical cable attached to my G1 is available here:
https://www.noisebridge.net/wiki/Image:G1-two-usb-to-serial-cable.jpg
This is the code for that interface (see the Android source):
/kernel/drivers/serial/msm_serial_debugger.c
From the source you'll see the following commands available when the
phone is booted:
pc
regs
reboot
irqs
kmsg
version
sysrq
If you have the developer or engineering boot loader, you can do more...
You can boot the phone with the camera button held down to access a
serial boot prompt that looks like this:
UART0:Cmd>
So far I've only seen a single command 'set'. I didn't find very much
useful information beyond that for the serial interface to the (first?)
boot loader. Perhaps someone knows more about this? It may prove to be
useful...
Another interesting but unrelated (GSM) test function is available in
the dialer program when the phone is booted by calling this number:
*#*#INFO#*#*
Best,
Jake

For the USB pinout, check http://pinouts.ru/Slots/USB_pinout.shtml.
Now, converting to serial is (or should be due to the USB specs) more
than just running wires from one connector to the other. There are
chips used to do the conversion and they are pretty cheap (like $1/
each or less). You could be lazy and then get a usb-to-serial cable
like this one, http://www.geeks.com/details.asp?invtid=800A-RS232&cpc=SCH,
and put the mini-usb connector on it.